S&P Global’s top economist sees dollar dominance diminishing

LONDON: The dollar’s grip as the dominant global currency is loosening, credit rating agency S&P Global’s top economist said on Tuesday.

Aggressive US sanctions such as last year’s freezing of hundreds of billions of dollar’s worth of Russia’s reserves has seen a flurry of countries start to do some trade in currencies other than dollar as well as repatriate gold reserves.

The dollar “doesn’t have quite the pull it used to,” Paul Gruenwald, S&P’s chief economist, said at a conference hosted by the ratings firm in London.

“There’s a fragmentation around the edges”.

Gruenwald pointed to a number of examples where countries were now circumventing the dollar: “We’ve got other things happening outside of the dollar world”.

He cited the rise in trade done in China’s yuan and the cheap financing offered by China-headquartered development banks such as the Asia Infrastructure Investment Bank and the New Development Bank, formerly known as the BRICs bank. “The US (dollar) will continue to be a leading world currency, (but) it will no longer be the dominant world currency,” Gruenwald said.